San Francisco’s Thumbtack Receives $100 Million in Funding

Every year, in the lobby of my building, and endless other buildings around the great city, and on front porches and doorstops and through the mail slots of our nation, phone-books are still delivered. And in my building – in all the buildings I have lived in – there they sit, a mild obstruction in the lobby, their appearance as inexplicable as the molting rise of a cicada swarm. One day you are clear; the next their presence is unavoidable.

But you try to avoid it. No one picks them up or even glances at them, as if they are a sickened but distant relative you hope you’ll be able to ignore. They seem like something from a distant past, something uncomfortable.

Phonebooks are relics of a distant economy that has faded. Nothing exemplifies this more than the enormous investment Google Captial just put in San Francisco-based Thumbtack. The information giant invested $100 million to be a partner with the service that matches professionals, from skilled tradesmen to nannies to lowly writers, with those in need of their services. This helps demonstrate an enormous transformation in the way our economy is structured, and how the service industry is changing to adapt in a mobile world.

Thumbtack
Thumbtack is trying to take away the role of luck in finding a service professional. Image from thumbtack.com

Consider the phone book

Consider then the phone book, that embarrassing aunt. For decades, that’s how people found help. If you needed a plumber, you’d open the phone book and try to find one that looked reputable. The only way around this was to consult with the Better Business Bureau or get a tip from a neighbor or friend. But it was easiest just to open the book. There’s a reason there are so many random companies with names like “Aardvark Eyeglass Repair.” It isn’t that aardvarks are known for their visual acuity (nor propensity for breaking reading glasses, I guess). But who was going to take the time to research different repair shops in the days before the internet? Might as well go with the one that comes up first.

This was a major flaw in the service economy. After all, it forced both sides of the equation – buyer and seller – into a game of chance. You might be the best weathervane installer in the world, but your last name was Johnson, and the guys at AAA Weathervanes were taking all the business. As for the consumer, you weren’t going to take the time to go to the BBB office and do the research, and the guys at AAA turned out to be pretty incompetent. They were good at placing themselves high up in the phone book, but not at basic weathervane installation. How do you even put that rooster on upside down? It’s a mess.

In a way, this subverted the ideals of the free market on which capitalism in America was built. It didn’t allow for a full meritocracy in the marketplace, but left things up to a roll of the dice, or the sloppily-placed finger of an impatient homeowner. It wasn’t really until the internet came around that this stood a chance at self-correction.

The rise of crowd-sourcing

With the advent of crowd-sourced intelligence, it became quick and easy to get a sense of professional capabilities. Angie’s List let you know how other users rated their gardeners, yoga instructors, plumbers, etc. Yelp! did much the same for the food and beauty industry. We’ve talked about the limits of crowd-sourced wisdom, but both of these sites are incredibly useful.

However, and this is especially true in the case of Angie’s List, both are kind of super-powered phone books. They give you information on a business, and what people think of it, and then you can decide if you want to use it or not. They are both an excellent filter. What they don’t do is make the connection.

That’s where Thumbtack comes in. Founded in San Francisco in 2009, Thumbtack helps buyers meet with sellers. A professional sets up a profile, detailing what he or she does best, and then can be matched up with someone who needs their services via a bidding process. Let’s actually make an example out of this, and show the way the economy used to work and how it does now.

Tiling: Apparently the Example We Chose

Let’s say there is an amazing artisanal tiler. She’s skilled both technically and artistically, and specializes in high-end wall and floor jobs, where she can create amazing murals by putting carefully-crafted stone in the right spots. But she isn’t above doing normal, non-artistic work, either. She’ll do the grunt jobs, and do a great job with them, giving a kitchen floor in a mid-level townhouse the same care and attention she would to an expensive job for a rich client.

So how would she market her business in a Yellow Pages world? You don’t want to emphasize the artistic side; you might scare away the bread-and-butter jobs. But you don’t want to make it sound like the artistic side is just a side gig; people might not take you seriously. In limited space, you don’t have a lot of options, even if you spend it directing people to your web site. The first impression means a ton.

And if you are looking for tiling, you can go to Angie’s List, and it can tell you who does a great job, but your work is unique, and the big picture hides the details, as Thumbtack CEO and founder Marco Zappocosta explained in an interview.

So Thumbtack allows our tiler to create a profile for herself, outlining the kind of work she does and the kind she is looking for. And then when a buyer comes on to Thumbtack, looking for tile, our girl gets a notice about it – if what is being looked for matches what she is offering – and she can submit a bid.

The buyer can look at the bids, and look at the profiles of the bidders. They can see past work, depending on how much effort was put into the profile. They can really get a sense of who is the right person for the job. It is information-rich, and helps to match the right person with the right work.

More than on-demand

This seems to go hand-in-hand with the on-demand economy. You can get exactly who you want, and that is a big part of the story, but it’s also more than that. I think this is a market corrective for capitalism. It isn’t just splashy ads or alphabetically-correct names, and it takes a huge amount of luck away from the proceedings.

Luck has always been the great unmentionable. Some people were born on third and imagined they had hit a triple; some never got a chance to even get an at-bat. It seemed like it would always be that way. Success and failure were too often a matter of chance, by dint of birth or something else beyond your control.

Thumbtack – and indeed mobile-driven connectivity – doesn’t by itself solve everything or obviate the role of luck. There are still innumerable factors that go into whether a business is successful. Luck plays a part (and as an aside, this quote by Paul Newman is the best thing I’ve ever read about luck).

But it plays less of a role in the service economy now, thanks to sites like Thumbtack. You stand a better chance of finding the professional that will do the best job, and the best pro stands a better chance at getting work. Merit is allowed to rise. At the very least, it is a better system than the random pointing of fingers at a page whose very color prematurely but accurately evoked its relegation to a crumbling memory.

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